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A day before Ashley Highfield (pictured) becomes CEO, the Office of Fair Trading (OFT), has referred the BBC Worldwide/ITV/C4 Kangaroo VOD JV to the Competition Commission, for a more thorough scrutiny that will significantly impede its planned launch.
The OFT revealed the venture partners had made offers to remedy concerns and avoid the referral, “but they were of limited scope, which the OFT did not consider sufficient to resolve the concerns in a clear-cut fashion”.
So it passed the case on to the independent commission, whose own inquiry could take six months, saying: “Concerns arise because the concentration of these important and competing libraries of UK TV programming may give market power to the joint venture, enabling it to charge higher prices in syndicating content to wholesale customers, and potentially raise … prices paid by VOD consumers, or limit the range of ways in which viewers can watch the parties’ content on demand.” Joost, Virgin Media (NSDQ: VMED) and BSkyB (NYSE: BSY) were amongst complainants to the OFT’s inquiry.
Whilst it cleared Lovefilm’s recent acquisition of Amazon’s UK DVD rental business in a case that similarly concerned market dominance issues, the OFT said there was insufficient evidence to make such a judgement about Kangaroo – though it acknowledged there are likely to be plenty of VOD alternatives available to consumers if Kangaroo ever raised prices. The OFT said it was making the referral “under the provisions of the Enterprise Act 2002“, which governs antitrust cases. Release.
ITV (LSE: ITV) exec chairman Michael Grade lashed out: